Commenting on the publication by the Department for Energy Security and Net Zero of the key parameters for next year’s auction for contracts to generate clean power (Contracts for Difference in Allocation Round 6), RenewableUK Cymru’s Director Jess Hooper said:
“It is very positive to see the increases in the administrative strike prices across the board for renewable energy. It is imperative we take action now to transition away from fossil fuels, and this news demonstrates the UK Government is responding to the needs of the clean energy sector at a crucial time of challenging inflationary pressure. This move will be key to getting projects built and to reaching targets of 50GW offshore wind, including 5GW of floating offshore wind (FLOW) by 2030.
“We desperately need a winner in the Celtic Sea now to kick start FLOW project deployment and associated investment in the region. There are a handful of Welsh projects – including fixed and floating offshore wind and onshore wind – that would be eligible for the next auction round (AR6), and these uplifts have been warmly welcomed by our members. The new prices provide a greater level of certainty for investors and long-term financial security for developers that projects will be able to be built at a sustainable price. Even at these new levels, renewables remain the lowest cost means of generating electricity and meeting our rising electricity demand and energy security needs.
“Looking ahead, we need to secure more Welsh winners in Auction round 6 to support our move away from fossil fuels. It is essential that the regions are not forced to compete with each other and the UK Government provides a budget that matches our renewable energy ambitions to deliver more clean power for the people of Wales. We look forward to seeing the budget and capacity provided for AR6 in March next year.”
Because of the low price guarantees offered in this year’s allocation round (AR5), the results were hugely disappointing for offshore wind – securing no bids and zero capacity – including from Wales’ flagship 100MW floating offshore wind test and demonstration project, Erebus.
The renewables auction is an annual process in which the government attempts to incentivise private sector investment in renewable energy projects by offering financial support contracts known as “contracts for difference” (CfDs). Developers are offered a guaranteed maximum price for energy generated, called a strike price.
The price uplifts announced for AR6 are as follows:
- Offshore wind – increase of 66%from £44 per megawatt hour to £73
- Onshore wind – increase of 21%from £52.2 per megawatt hour to £64
- Floating offshore wind – increase of 52%from £116 per megawatt hour to £176
- Tidal – increase of 29%from £202 per megawatt hour to £261
- Solar – increase of 30%from £47 per megawatt hour to £61